Net Sales

Our revenues grew 11.2% in fiscal year 2012 from $57,496 million pesos in 2011 to $63,944 million pesos in 2012. This increase was generated by the results in the three business segments discussed below:

 

• Retail in Mexico:

Sales in our retail operations in Mexico grew 10.6% in relation to the previous year from $45,327 million pesos in 2011 to $50,149 million pesos in 2012. This was attributable to growth of 1.9% in same store sales and the inclusion of fifteen new stores during the fiscal period.

 

• Retail in the United States:

Our retail operations in the USA reported growth of 13.6% in relation to those obtained the previous year and rose from $11,605 million pesos in 2011 to $13,177 million pesos in 2012. This was the result of the incorporation of nine new stores, of which eight were acquired, as well as the partial effect of a decline in same store sales of 0.8 percent.

 

• Real Estate Segment:

Operations of the real estate business remained very stable with growth in revenues of 9.3% in relation to the prior year from $564 million pesos in 2011 to $617 million pesos in 2012, mainly as the result of increases in lease agreements that approximated the inflation rate.

 

Gross Profit

Consolidated gross profit was $12,586 million pesos and grew 11.1% in relation to 2011. The gross margin was 19.7% and similar to the figure of 19.7% obtained in 2011.

 

Operating Expenses

Consolidated operating expenses without including depreciation or amortization totaled $8,333 million pesos, 12.1% higher than the figure of $7,434 million pesos registered in 2011. The increase was due principally to pre-operating expenses at the fifteen stores opened in Mexico and nine stores in the USA during the year that still have not reached maturity, as well as higher electric energy costs in Mexico.

 

EBITDA

With the results mentioned above, consolidated EBITDA of $4,252 million pesos was 9.3% higher than the figure of $3,892 million pesos in 2011. The EBITDA margin was 6.7% and slightly lower than the margin of 6.8% achieved in 2011. Results were as follows at the business segment level:

 

• Retail in Mexico:

EBITDA in Retail Mexico of $3,338 million pesos was 7.4% higher than the figure of $3,109 million pesos in 2011 and represented a margin on sales of 6.7% that was lower than the margin of 6.9% achieved in 2011.

 

• Retail in the United States:

The Retail USA division achieved EBITDA of $489 million pesos, 20.9% higher than the level of $405 million pesos in 2011 with a margin on sales of 3.7% that was higher than the margin of 3.5% in 2011. This result showed the benefit of having opened a distribution center in Los Angeles and also reflected appreciation of 5.4% in the exchange rate.

 

• Real Estate Segment:

 EBITDA in the real estate division was $425 million pesos, 12.6% higher than the level of $378 million pesos obtained in 2011 and represented a margin on sales of 68.9% that was higher than the margin of 66.9% achieved in 2011.

 

Comprehensive Financial Cost

Financing costs reached $978 million pesos, 20.6% higher than the expense of $811 million pesos incurred in 2011 and represented 1.5% of sales, a percentage higher than that of 1.4% of sales in 2011.

 

Income Taxes

The official tax rate remained at 30% in fiscal year 2012 whereas our rate remained at 22%. Income taxes in 2012 were $436 million pesos, 1.1% below the figure of $440 million pesos in 2011.

 

Net Profit

Lastly, consolidated net profit totaled $1,545 million pesos, 1.1% lower than the net profit of $1,562 million pesos in 2011 with a margin on sales of 2.4% that was slightly below the margin of 2.7% obtained in the previous year.

 

Debt and Capex

Net interest-bearing bank debt came to $4,957 million pesos at December 31, 2012, 13.7% greater than the level of $4,360 million pesos as the close of 2011, and represented a ratio of Net Bank Debt / Ebitda of 1.6 times.

 

Capex, including real estate, store and computing equipment and intangible assets was $3,574 million pesos and enabled us to open fifteen stores in Mexico and one in the United States as well as to purchase eight stores in that country.

 

Dividends

The General Shareholder’s Meeting in 2012 authorized the decree for a dividend equivalent to 216 million pesos, or 22.42 cents per ordinary share.

Grupo Comercial Chedraui, S.A.B. de C.V.

Analysis and discussion of results for fiscal year 2012